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Adjudicator Upholds Record Number of Complaints about HMRC in 2013/14 Print E-mail
Personal Taxes
Written by Lee Sharpe   
Thursday, 10 July 2014 00:00

It seems TW’s not alone in being unhappy with HMRC at the moment: the Adjudicator has upheld 9 out of 10 complaints about HMRC in 2013/14.

HMRC has published a press release on the Adjudicator’s 2013/14 report – although it has not yet made it to HMRC’s website.

The report states that, in its busiest year ever for HMRC complaints, it has upheld 90% of them in favour of the taxpayer – up from 60% in the previous year. So, not only a record number of complaints dealt with, but a record number of complaints upheld. HMRC has also had to repay about £2million in tax - almost ten times the amount in 2012/13.

Unsurprisingly, the majority of cases were in relation to PAYE and Extra-Statutory Concession A19, whereby HMRC is supposed to give up tax when it fails to act on information it has received to collect tax in a timely fashion.

TW’s Mark McLaughlin had this to say:

“We at TaxationWeb – and numerous colleagues in the profession – have long been saying that HMRC has for several years been trying to marginalise claims under ESC A19.

It seems that this has come home to roost. The message from the Adjudicator’s Office seems quite clear: HMRC has – systematically, based on these numbers – wrongly applied ESC A19 to the detriment of taxpayers. It is extremely worrying to think that many thousands more honest taxpayers  will simply have accepted HMRC’s word, or had their claims turned down in the so-called “three tiers of refusal” which passed for its internal review procedure.

Reform is required – and not the “simplification” they tried to introduce a year or so ago, which was a thinly-veiled attempt to water down the rules in their favour.

Perhaps, most importantly, someone at HMRC needs to take responsibility and to say “sorry” for delivering such an astonishingly poor service to the taxpayer. While HMRC may try to argue that this is a very small percentage of the volume of cases it deals with, it is almost certainly a very small percentage of the many more people that have had their claims unfairly rejected. And let’s not forget, HMRC was supposed to apply this concession without having to be asked in the first place.”

No Tax Relief for McLaren Fine Print E-mail
Business Tax
Written by HM Revenue & Customs   
Wednesday, 18 June 2014 12:48

Formula 1 racing giant McLaren has lost its claim that a £32 million fine imposed against it by the sport’s governing body should be tax deductible.

McLaren took legal action after HM Revenue and Customs (HMRC) disagreed that it could deduct the finein computing its taxable profits.However, a tax tribunal has now supported HMRC’s view.

HMRC’s Director General of Business Tax, Jim Harra, welcomed the ruling:

“We’re very pleased the Upper Tribunal agrees that the fine should not be given tax relief, which supports our view that most fines are not allowable as deductions against trading income.

This case shows that we won’t hesitate to go to court to make sure the right tax is paid.”

The £32 million penalty was imposed on McLaren by the sport’s governing body, the Fédération Internationale de l'Automobile (FIA), in 2007 for breaching its International Sporting Code.  

A First-tier Tribunal ruled the penalty was tax deductible. However the Upper Tribunal has now supported HMRC’s appeal against that decision by ruling the penalty was not incurred wholly and exclusively for the purposes of McLaren’s trade and so was not an allowable deduction for tax.

Link to the Upper Tribunal’s Judgment is here, courtesy of HMRCLink

HMRC Secures Record £4.6m Minimum Wage Arrears for Underpaid Workers Print E-mail
Business Tax
Written by HM Revenue & Customs   
Friday, 06 June 2014 00:00

Over £4.6 million in wage arrears has been paid to more than 22,000 workers following a successful year for HM Revenue and Customs’ (HMRC) National Minimum Wage (NMW) enforcement teams.

New figures show that, in 2013/14, HMRC:

  • conducted 1,455 investigations
  • issued 652 financial penalties, worth £815,269
  • found arrears in 47 per cent of cases – the highest strike rate since the NMW was introduced
  • recovered average arrears of around £205 per worker.

Business Minister Jenny Willott said:

“Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences.

We want to issue a clear warning to employers who fail to pay the minimum wage: under the Government’s new rules you will be named and shamed and face a stiff financial penalty.

If anyone suspects they are not being paid the wage they are legally entitled to, they should call the Pay and Work Rights Helpline.”

Examples of underpayment cases where HMRC has taken action in the past year include:

  • A Premier League football club which was ordered to pay arrears of over £27,500 to over 3,000 workers after it made deductions for uniforms and travelling time for staff working in hospitality.
  • A social care provider which was found to have not paid its staff for travelling time and other hours worked and was told to repay over £600,000 in arrears of wages to almost 3,000 workers.
  • A recruitment agency which was ordered to pay over £167,000 to workers, including some it had classified as unpaid interns.
  • A multi-outlet retailer, which required its employees to attend work before and after opening hours without pay, and which was ordered to repay almost £77,000 to more than 1,300 workers.

Jennie Granger, Director of Enforcement and Compliance at HMRC, said:

“Paying the National Minimum Wage is not a choice – it’s the law. HMRC will continue to ensure that workers get at least the wage to which they are legally entitled.

Where an employer ignores these rules, we will ensure that any arrears are paid out in full and the employer is fined. Rogue employers be warned – we will find you and you will pay.”

Further Points

  • The vast majority of National Minimum Wage cases are dealt with using civil penalty powers, as this route is usually the most appropriate and provides the most cost-effective resolution for taxpayers. However, in more severe cases, HMRC will take criminal action and seek a prosecution.
  • Anyone who believes they are not being paid the National Minimum Wage can call the Pay and Work Rights Helpline on 0800 917 2368.
  • Calls to the Helpline from interns who are working for nothing or for “expenses only” are being fast-tracked to HMRC enforcement officers for investigation.
Tax Credits Claimants Reminded to Renew it or Lose It Print E-mail
Written by HM Revenue & Customs   
Tuesday, 03 June 2014 00:00

Tax credits customers are being prompted, through an advertising campaign launched today, to renew their claim now.

HM Revenue and Customs (HMRC) is sending out 5.8 million tax credits renewals packs which will arrive by 30 June. Over 3 million of these claims need to be renewed before the deadline for claimants to continue receiving tax credits. Last year some 650,000 claimants had their money stopped because they did not renew by the 31 July deadline.

Claimants must tell HMRC about any changes to their circumstances that they haven’t already reported, including changes to working hours, childcare costs and income, or if a partner has moved in.

This year, as well as being able to renew by post and by phone, claimants with no changes to report are also able to renew online, via GOV.UK.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

"People should check their details and renew early to make sure they get the right money. Don't leave it – people who don't renew on time risk losing their payments."

Before checking their form or calling HMRC’s Tax Credit Helpline, claimants are urged to have the right documents to hand, for example, payslips, end of year P60 forms and childcare payment details.

The advertising campaign runs throughout June and July on radio, television, bus shelters, and via a mobile app, Spotify and video on demand.

Claimants can get help and information on tax credits renewals from:


telephone: Tax Credits helpline – 0345 300 3900 

Industrial Buildings Allowance Claim Fails at Upper Tribunal Print E-mail
Personal Taxes
Written by Lee Sharpe   
Tuesday, 03 June 2014 00:00

HMRC has publicised that it has been vindicated at both the First Tier and now the Upper Tier Tribunals, in refusing Industrial Buildings Allowance (IBAs). (Next Distribution Ltd. & Others v HMRC [2014] UKUT 0227 (TCC))

While IBAs were abolished some years ago, at a time when the relief was available the retailer Next (under Next and Paige Groups respectively) had attempted to claim some £19million in expenditure on two premises it used for logistics - the taxpayer claimed that the buildings were involved in subjecting goods to a process, that the goods were stored there preparatory to the goods’ being subjected to a process (breaking down bulk shipping consignments into smaller parcels) and/or were being used to store goods on their arrival to the UK from overseas.

The tribunal held that, while the buildings were (of course) used to store goods, the goods themselves were not subjected to sufficient a process , etc., and that the goods had “arrived” to the UK long before they ended up in the taxpayer’s warehouses, which was many miles inland from delivery. The case was long in the reporting and there is much detail. Many readers will recall how tortuous was the IBAs legislation and its subsequent interpretation by the courts.

The decision of the FTT is at Next Distribution Ltd. & Others v HMRC [2012] UKFTT 405 (TC)

The taxpayer appealed against the First-Tier Tribunal’s decision, but it was upheld by the Upper Tribunal – although the reasoning changed a little, and HMRC’s case was not approved on all points.

The Upper Tribunal’s decision is at Next Distribution Ltd. & Others v HMRC [2014] UKUT 0227 (TCC)

HMRC has been quick to publicise its victory in this latest turn and seems intent to cast the taxpayer in a poor light, with Jim Harra, HMRC’s Director General of Business Tax quoted as saying,

“This case shows that, when any business – large or small – tries to claim capital allowances beyond their scope, HMRC will challenge it, including through the courts if necessary.”

HMRC’s press release also asserts that this decision “safeguards about £2.8 million of revenue”.

Whlie the taxpayer hardly needs TW to speak in its defence, we think it appropriate to question the manner in which HMRC has reported this case. The language is not dissimilar to that reserved for “artificial” schemes which are perceived to have little economic basis other than to reduce tax. Simply put, the taxpayer constructed two large buildings – at substantial cost – in which some fairly complex operations were undertaken – a “genuine” economic activity. The taxpayer seems to have held a quite reasonable belief that it was entitled to tax relief on a good part of that expenditure. The tribunals – both of them, to be fair – have upheld HMRC’s view that relief was not available.

While HMRC is of course right to publicise the limit of IBAs, it is questionable whether the tone of its report serves an aim in the public interest, or effectively tries to dissuade taxpayers from making what one might loosely term “reasonably believed” tax claims in respect of “genuine economic activities”. 

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